Factory output in December falls by 0.4%

Index of Industrial Production (IIP), or factory output for the month of December 2016 falls by 0.4% at 183.5 as compared to the level in the month of December 2015. The cumulative growth for the period April-December 2016 over the corresponding period of the previous year stands at 0.3%. IIP in the month of November rose 5.7%, the first month that felt the impact of demonetisation.

The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of December 2016 stand at 144.5, 189.3 and 194.7 respectively, with the corresponding growth rates of 5.2%, (-) 2.0% and 6.3% as compared to December 2015. The cumulative growth in these three sectors during April-December 2016 over the corresponding period of 2015 has been 0.9%, (-) 0.5% and 5.1% respectively.

Ministry of Statistics & Programme Implementation said, "In terms of industries, seventeen out of the twenty two industry groups  in the manufacturing sector have shown negative growth during the month of December 2016 as compared to the corresponding month of the previous year."

The industry group ‘Office, accounting and computing machinery’ has shown the highest negative growth of (-) 23.9% followed by (-) 22.9% in ‘Other transport equipment’ and (-) 14.4% in ‘Luggage, handbags, saddlery, harness & footwear; tanning and dressing of leather products’. On the other hand, the industry group ‘Basic metals’ has shown the highest positive growth of 11.1% followed by 9.8% in ‘Radio, TV and communication equipment & apparatus’ and 3.0% in ‘Coke, refined petroleum products and nuclear fuel’.

source: tradingeconomics.com

As per Use-based classification, the growth rates in December 2016 over December 2015 are 5.3% in Basic goods, (-) 3.0% in Capital goods and (-) 1.2% in Intermediate goods. The Consumer durables and Consumer non-durables have recorded growth of (-) 10.3% and (-) 5.0% respectively, with the overall growth in Consumer goods being (-) 6.8%, Ministry data showed. 

A Reuters poll showed that Industrial output growth slowed to 1.1% in December from 5.7% in November. The reduced pace is "primarily on account of a slowdown in the growth momentum of consumption goods sector" Rupa Rege Nitsure, group chief economist at L&T Financial Services, wrote in a note to Reuters. 

After the release of IIP data for the November month, Crisil in its report had said that consumer durables output and sales could slowdown even more in December following the scrapping of high denomination currency notes and the limit on daily and weekly cash withdrawals.